The value of the global cryptocurrency market has increased by 900% between March 2020 to February 2021. Bitcoin has statistically been the fastest horse in the race during this market expansion.
If for some reason, this incredible cryptocurrency market expansion escaped your radar, then we are here to help put it on your map—what better place to start than with the most successful cryptocurrency of them all, Bitcoin.
So, what exactly is Bitcoin? How is it created, and how do you use Bitcoin? We’ll help answer those questions and more as you read ahead.
What Is Bitcoin?
Bitcoin was created as a decentralized, peer-to-peer electronic cash system for online transactions. Bitcoin relies on cryptographic proof instead of trust in a bank or a government institution to operate.
Bitcoin works as a digital currency as long as people believe in it – just like any government-issued fiat currency. Every bitcoin transaction that exists, including the minting of new Bitcoin through mining, is accessible to everyone.
It is recorded on a digital ledger known as the Blockchain.
How Does Bitcoin Work?
The technology network that runs Bitcoin, known as the Blockchain, acts as a digital ledger that timestamps all transactions through hashing. Hashing helps form a record that cannot be changed or manipulated.
This record is made available publicly for all computers in the network to verify. This public verification process creates a decentralized platform for the currency to exist outside the regulation of government and financial institutions.
How Does Bitcoin Mining Work?
Bitcoin mining is the process of minting new Bitcoin to the blockchain. Each new minting thus creates a new transaction or proof-of-work on the Blockchain.
Bitcoin mining involves a series of sophisticated computer technology that solves mathematical puzzles to unlock new Bitcoin. Each new piece of code discovered is rewarded with the minting of new Bitcoin.
You can see more here about bitcoin mining and learn about other information as well.
How Do You Use Bitcoin?
Many individuals see Bitcoin as a long-term, alternative investment to stocks and bonds. However, its mainstream adoption as a form of payment is still in development. In other words, not many businesses are jumping at the opportunity to accept Bitcoin as a form of payment yet.
However, large companies like PayPal are working towards developing technology that connects Bitcoin to your debit card. This technology will allow you to connect your Bitcoin to a debit card for everyday purchases.
Other individuals use crypto exchanges like Binance or Coinbase to buy and sell different cryptocurrencies for short-term profit.
Should You Buy Bitcoin?
“How do you use Bitcoin?” should no longer be a question you have to answer, but what about purchasing it?
Are you looking to Bitcoin as a long-term store of value? Or, are you looking to trade Bitcoin on a cryptocurrency exchange for short-term profits? Having a purchasing strategy will help you decide if a cryptocurrency exchange or Bitcoin ATM will offer the right solution.
We hope you found this article helpful. If you did, we have plenty more information about cryptocurrency for you on our blog. See you there.